UNPRECEDENTED: USDA officials announce assistance program

In a rare and unique action, U.S. Secretary of Agriculture Sonny Perdue late on a Friday night announced the Coronavirus Food Assistance Program (CFAP). The Big Show's Andy Petersen was invited to a preview where he found out the new U.S. Department of Agriculture (USDA) program will take several actions to assist farmers, ranchers, and consumers in response to the COVID-19 national emergency. President Trump directed USDA to craft this $19 billion immediate relief program to provide critical support to our farmers and ranchers, maintain the integrity of our food supply chain, and ensure every American continues to receive and have access to the food they need.

“During this time of national crisis, President Trump and USDA are standing with our farmers, ranchers, and all citizens to make sure they are taken care of,” Secretary Perdue said. “The American food supply chain had to adapt, and it remains safe, secure, and strong, and we all know that starts with America’s farmers and ranchers. This program will not only provide immediate relief for our farmers and ranchers, but it will also allow for the purchase and distribution of our agricultural abundance to help our fellow Americans in need.”

CFAP will use the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities. The program includes two major elements to achieve these goals.

  1. Direct Support to Farmers and Ranchers:The program will provide $16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.  
  2. USDA Purchase and Distribution: USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to purchase $3 billion in fresh produce, dairy, and meat. We will begin with the procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need.

On top of these targeted programs USDA will utilize other available funding sources to purchase and distribute food to those in need. 

  • USDA has up to an additional $873.3 million available in Section 32 funding to purchase a variety of agricultural products for distribution to food banks. The use of these funds will be determined by industry requests, USDA agricultural market analysis, and food bank needs. 
  • The FFCRA and CARES Act provided an at least $850 million for food bank administrative costs and USDA food purchases, of which a minimum of $600 million will be designated for food purchases. The use of these funds will be determined by food bank need and product availability.

Further details regarding eligibility, rates, and other implementation will be released at a later date. Reaction with-in the industry so far has been mostly negative.

From our friends at the National Pork Producers Council:

The U.S. Department of Agriculture (USDA) COVID-19 relief package that includes $3 billion in planned agricultural product purchases and $1.6 billion in direct payments to hog farmers, including payment limitations of $125,000 per commodity and $250,000 per individual. Industry economists conservatively estimate that hog farmers will lose $37 per hog marketed, or $5 billion collectively, for the remainder of the year.

"We fear the lifeline so desperately needed will fall short of what is truly needed. While the direct payments to hog farmers will offset some losses for some farmers, they are not sufficient to sustain the varied market participants, including those who own hogs as well aswho care for pigs," said Howard "A.V." Roth, president of the National Pork Producers Council and a hog farmer from Wauzeka, Wisconsin. "All of these participants have made sizable investments in a U.S. pork production system that is the envy of the world. Many generational family farms will go bankrupt without immediate financial aid.

Roth continues, "We are thankful for USDA commodity purchases, a step that will hopefully help move a backed up supply of pork to those who need it, creating much-needed plant capacity to harvest market-ready hogs that have lost value as they have backed-up on farms because of COVID-19. Our farm sector is made up of different market participants who are dependent on one another to maintain profitable operations. Unlike other industries that have received COVID relief aid without restrictions, many of our hog farmers have been left behind. Without quick action to extend support where it is needed most, we will see pork industry consolidation, a decline in healthy competition that drives innovation and the loss of a relished rural lifestyle for many farm families."

Our Big Show Buddies in the the ethanol agree:

While the package will help the nation’s farmers and ranchers, it does not provide any assistance to America’s ethanol industry, which has been devastated by the effects of the COVID-19 pandemic.

“While we appreciate that USDA’s new program provides needed assistance to the nation’s farmers and ranchers, it is unfortunate and disappointing that the 350,000 workers supported by America’s ethanol industry were left behind," says Renewable Fuels Association President and CEO Geoff Cooper: b “USDA missed a crucial opportunity to lend a helping hand to an industry that is suffering the worst economic crisis in its history. Roughly half of the ethanol industry is shut down today, as fuel demand has collapsed in response to COVID-19. Corn demand and prices have plummeted as plants across the country are idling. Jobs are being lost, grain markets are being ravaged, rural communities are being destabilized, and the long-term future of homegrown renewable fuels hangs in the balance. But even in the face of tremendous adversity, ethanol producers have stepped forward to help in the battle against coronavirus by ramping up production of high-purity alcohol for hand sanitizer and continuing to supply animal feed and capture carbon dioxide to the food supply chain.

Further, Cooper says, “While today’s package is a start, more assistance will be required to help the farm sector and rural America fully recover from the devastating effects of this pandemic; we implore Congress and the administration to ensure that the ethanol industry is included in the next round of emergency relief. With each passing day, the nation’s renewable fuels sector edges closer to the brink of complete collapse. The ethanol industry needs help. We simply cannot afford to lose an industry that has become part of the fabric of rural America.”

We'll have much more on these breaking developments, and what they mean for you, like we always do on Monday's Big Show.


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